A year after losing the title it held for nearly a century as America’s top auto seller, General Motors is back on top. On Wednesday, GM reported sales of 2.3 million vehicles in the US. Strong fourth-quarter sales, up 41% year-over-year, put it on track to end the year with sales growth of nearly 3% from 2.2 million vehicles sold in the US in 2021, suffering 13 -percentage drop. Meanwhile, Toyota, which held the top spot in 2021, saw its full-year sales fall nearly 10% to 2.1 million, despite a 13% increase in sales in the fourth quarter. In each of the past two years, industry-wide auto sales have been constrained by a shortage of the parts, especially computer chips, needed to build the cars and trucks that consumers wanted. Total new vehicle sales in the U.S. are expected to fall to just under 14 million vehicles when final industry-wide sales results are released later this week. That would be the lowest total sales since the country just emerged from the Great Recession more than a decade ago. Sales bottomed out at 10.5 million in 2009, the year GM and Chrysler filed for bankruptcy and received federal bailouts, and climbed to just 12.7 million by 2011, the last year the industry’s sales fell below 14 million. Sales in 2019 were 17 million. , a year before the pandemic shook both the economy and supply chains. Most forecasts say supply chain issues are improving, which should allow automakers to ramp up production in 2023. They point to better sales in the fourth quarter than at the start of the year as evidence, even with higher car prices and rising interest rates, due to making them more expensive for buyers than in the past. As a result, they forecast a modest increase in sales for this year of just north of 14 million vehicles. But many experts caution that the forecast for increased sales depends on whether the U.S. economy does not slip into recession and instead simply experiences slower growth. And with uncertainty about what will happen to the economy, the outlook for auto sales is much more uncertain than in previous years, they say. Charlie Chesbrough, Chief Economist for Cox Automotive. “Usually we have an idea which way it’s going. But this year it could go up or down.” There are several factors that support new car sales next year, even if the economy slumps. One is the fact that rental car companies haven’t been able to buy the inventory of new cars they need over the past two years, as automakers have cut back on the cars available for cheaper fleet sales, selling all or nearly all of their cars. which Instead, consumers had to. “Rental companies are making half the purchases they’re used to,” said Ivan Drury, director of insights at Edmunds. And Drury said that if automakers begin to see weakness in consumer demand, they can bring back incentives, including lower-interest financing, that they haven’t had to offer in recent years, when demand outstripped supply. “Incentives have been next to nothing lately,” he said. For now, demand is still strong, as there is pent-up demand from potential buyers who have been delaying purchases because they couldn’t find the vehicle they wanted. But both Drury and Chesbrough say higher average prices and higher interest rates are already driving buyers out of the market. A turnaround in the economy, especially if historically low unemployment rates begin to rise, could quickly lead to lower new car sales.
A year after losing the title it held for nearly a century as America’s top auto seller, General Motors is back on top.
On Wednesday, GM reported sales of 2.3 million vehicles in the US. Strong fourth-quarter sales, up 41% year-over-year, allowed it to finish the year with sales up nearly 3% from 2.2 million U.S. vehicles sold in 2021 , when it suffered a 13 percent drop.
Meanwhile, Toyota, the top seller in 2021, saw full-year sales drop nearly 10% to 2.1 million, despite posting a 13% increase in sales in the fourth quarter.
In each of the past two years, industry-wide auto sales have been constrained by a shortage of the parts, especially computer chips, needed to build the cars and trucks that consumers wanted. Total new vehicle sales in the U.S. are expected to fall to just under 14 million vehicles when final industry sales results are released later this week.
That would be the lowest total sales since the country was just emerging from the Great Recession more than a decade ago. Sales bottomed out at 10.5 million in 2009, when GM and Chrysler filed for bankruptcy and received federal bailouts, and only climbed to 12.7 million by 2011, the last year industry sales fell below 14 million.
In 2019, sales were 17 million, a year before the pandemic upended both the economy and supply chains.
Most forecasts say that supply chain issues are improving, which should allow automakers to increase production in 2023. As evidence, they point to better sales in the fourth quarter than at the start of the year, even with higher car prices and rising interest rates, which is more expensive for buyers than in the past.
This led them to predict a modest increase in sales this year to just 14 million vehicles.
But many experts caution that the forecast for increased sales depends on whether the U.S. economy does not slip into recession and instead simply experiences slower growth. And with uncertainty about what will happen to the economy, the outlook for auto sales is much more uncertain than in previous years, they say.
“I’ve been forecasting the auto market for decades. Next year is the most challenging,” said Charlie Chesbrough, chief economist for Cox Automotive. “Usually we have an idea which way it’s going. But this year it could go up or down.”
There are several factors supporting new car sales next year, even if the economy stumbles. One is the fact that rental car companies haven’t been able to buy the inventory of new cars they need over the past two years, as automakers have cut back on the cars available for cheaper fleet sales, selling all or nearly all of their cars. which consumers should instead.
“Rental companies had half the purchases they’re used to,” said Ivan Drury, director of insights at Edmunds.
And Drury said that if automakers begin to see weakness in consumer demand, they may return incentives, including lower-interest financing, that they haven’t had in recent years, when demand has outstripped supply.
“Incentives recently have been virtually zero,” he said.
For now, demand is still high, as there is pent-up demand from potential buyers who have been delaying purchases because they couldn’t find the vehicle they wanted. But both Drury and Chesbrough say higher average prices and higher interest rates are already driving buyers out of the market.
A turnaround in the economy, especially if historically low unemployment rates begin to rise, could quickly lead to lower new car sales.
